Getting Mortgage Rates That Make Sense In A Recession

How does a home buyer take maximum advantage of recession mortgage rates in the current economic climate? Mortgage interest rates are set by a number of variables. There are, of course, the interest rates in the overall market. Money is lent every day between banks, between the government and the banks, by the borrowing of the federal government and between banks and their customers. Those rates are determined by actions of the Federal Reserve and the supply and demand for money. In addition, the actual volume of money in the economy is controlled by the Fed.

To meet the demand for liquidity and to hold down interest rates, the Fed has pumped a lot of money into the economy in the last two years. This has had the effect of reducing the interest rates in general and for mortgage rates specifically.

This reduction in rates has been made more pronounced by the bankâ€™s general tightening of credit and down payment standards. Fewer people are qualifying for mortgages now, reducing the demand for mortgage money and reducing rates even further.

Todayâ€™s market is the perfect storm with the lowest mortgage interest rates in decades, rates that are historically low. Since a home buyer must forecast out into the future, it is valuable to make an educated guess about the future.

As the potential home-buyer looks at financing a home purchase, there are a couple of variables to consider.

The first is how long the homeowner expects to live in the home. If one is planning on moving within five years, it may make some sense to consider an adjustable rate loan, especially if a significantly lower rate can be obtained. That, of course, has been a recent problem for homeowners that have found themselves upside down on the value of their home compared to the mortgage. In fact, many have been unable to sell for that very reason, which would put your plans to sell or move in a shorter period of time in danger.

Perhaps the better alternative is to take out a 30 year fixed rate mortgage. The interest rate on a fixed rate loan will not change for a fixed period, usually 30 years. It essentially makes permanent the very low rates available in the market today, and creates a predictable housing cost for the next three decades.

The last consideration is what points and other charges the bank may impose on your mortgage loan. Examine closely what the lender will charge.

To find the best recession mortgage rates, a Google search is the best starting place. You should inquire of at least three different lenders and compare what they offer you.